When a business is sued, the lawsuit is generally filed in the state where the company is located. But sometimes an Arizona company can find itself being sued in another state — and it may be in a state where you don’t even do business.

So how is this possible? There are two primary reasons why your Arizona business could get sued in another state:

1. Even if your business is based in Arizona, it may be considered to be doing business in other states. If your company provides products or services to consumers or companies in other states, your customer may be able to file suit against you in the state where they live. If you have an Internet-based business, this can especially be true for you since you likely ship products all over the U.S. If you have a manufacturing company and sell through distributors based in other states, you can also be vulnerable to out-of-state lawsuits. If a customer is injured by one of your products, they can sue you if they believe the injury was caused by a design or manufacturing defect or error.
2. Your business signed a contract with another company that allows for a lawsuit to be filed in another state. Many contracts contain a forum selection clause that allows a lawsuit to be filed in the home state of the company that created the contract. Large companies and commercial lenders may opt to have claims against them litigated in the state where they are based or where they feel most comfortable litigating. The courts typically enforce forum selection clauses unless there is no substantial or reasonable relationship with the state named in the clause.

If you receive notice that a lawsuit has been filed against your company in another state, you should contact a business dispute attorney before you do anything else. Your attorney can then ascertain whether or not it is proper for your company to be sued there. If your company does not have a sufficient connection to that state, you may be able to pursue a dismissal of the suit based on personal jurisdiction.

When contract disputes arise, you need experienced legal representation and advice. Williams Commercial Law Group, L.L.P., is a law firm focusing on contract law, and business divorce. Contact us at (602) 256-9400 and schedule a time to meet with us today.